LOS ANGELES (AP) — Under a carefully orchestrated deal, California would again receive billions of dollars of mass transit funds that the federal government was withholding amid a dispute over cuts to public employee pension benefits.
As a result, transportation systems across the state no longer face service cuts and the prospect of abandoning planned light rail, subway and other construction projects.
The deal, announced Wednesday by the state's top Democrats as part of new legislation, temporarily exempts workers at public transit agencies from a 2012 California law that required public employees to contribute more to their retirement funds.
Unions objected in November, arguing that a 1964 federal law specifically protects public transit worker pensions against changes made outside of collective bargaining. The U.S. Department of Labor agreed, and began blocking the release of at least $1.6 billion of federal transit funds to California.
With dozens of mass transit projects affected from San Diego to the San Francisco Bay Area, and Democrats in control of the White House and California's Legislature and governorship, it seemed likely the money would eventually flow again.
Federal and state officials negotiated for months, and the state's transit agencies lobbied hard. The solution Wednesday includes not just legislation, which still must be passed before the Legislature leaves at the end of next week, but also a legal challenge.
The state and at least one transit agency — the Sacramento Regional Transit District — plan to argue in a lawsuit against the Labor Department that California's pension reforms should apply to transit workers. If a judge sides with the Labor Department, the transit worker exemption would be permanent. Under Wednesday's legislation, it is scheduled to expire at the end of 2014.
Both the Labor Department and Amalgamated Transit Union, which was the initial challenger to California's pension reforms, said in written statements that they support the deal — and are confident their common view will prevail in court.
The legislation's year-plus exemption won't apply to the Sacramento district, and on Wednesday, the Labor Department formally "decertified" a $14 million grant it had been awarded.
That was the first time in the past 15 years — covering more than 28,000 grant applications — that the Labor Department had denied transit funds, spokesman Mike Trupo said.
While the Sacramento district's CEO Mike Wiley said his agency had planned for the decertification, and state help would ensure that projects continue, managers at other agencies expressed relief that the money would restart soon.
The Los Angeles County Metropolitan Transportation Authority was able to front money so far this year — but its leaders openly worried about coming months, when MTA plans to solicit bids for a subway extension to the city's westside and a downtown light rail project. Between them, the projects rely on $3 billion of federal grants or loans.
In an interview, Art Leahy, the agency's CEO, said that while the Legislature still needs to act, a crisis has been averted.
"We think that we're fine," Leahy said, "and we're going to proceed on that basis."
Associated Press writer Juliet Williams in Sacramento, Calif., contributed to this report.
Created: Wed, 04 Sep 2013 08:16:23 EST
Updated: Wed, 04 Sep 2013 08:16:23 EST